Apollo Healthcare Corp Warrants (03/01/2022) APHWF

Simply Wall St Fair value for AHC is at $76.29/Share

[Birdwatch]

Below are the data sources, inputs and calculation used to determine the intrinsic value for Apollo Healthcare.

TSX:AHC Discounted Cash Flow Data Sources

Data Point	Source	Value
Valuation Model		2 Stage Free Cash Flow to Equity
Levered Free Cash Flow	Extrapolated from most recent financials.	See below
Discount Rate (Cost of Equity)	See below	7.1%
Perpetual Growth Rate	5-Year Average of CA Long-Term Govt Bond Rate	1.7%

An important part of a discounted cash flow is the discount rate, below we explain how it has been calculated.

Calculation of Discount Rate/ Cost of Equity for TSX:AHC

Data Point	Calculation/ Source	Result
Risk-Free Rate	5-Year Average of CA Long-Term Govt Bond Rate	1.7%
Equity Risk Premium	S&P Global	6.0%
Personal Products Unlevered Beta	Simply Wall St/ S&P Global	0.75
Re-levered Beta	= 0.33 + [(0.66 * Unlevered beta) * (1 + (1 - tax rate) (Debt/Market Equity))] = 0.33 + [(0.66 * 0.746) * (1 + (1 - 26.5%) (20.11%))]	0.903
Levered Beta	Levered Beta limited to 0.8 to 2.0 (practical range for a stable firm)	0.903
Discount Rate/ Cost of Equity	= Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium) = 1.66% + (0.903 * 6.01%)	7.09%

 

Discounted Cash Flow Calculation for TSX:AHC using 2 Stage Free Cash Flow to Equity

The calculations below outline how an intrinsic value for Apollo Healthcare is arrived at by discounting future cash flows to their present value using the 2 stage method. We use analyst's estimates of cash flows going forward 10 years for the 1st stage, the 2nd stage assumes the company grows at a stable rate into perpetuity.

TSX:AHC DCF 1st Stage: Next 10 years cash flow forecast

	Levered FCF (CAD, Millions)	Source	Present Value Discounted (@ 7.09%)
2021	54.52	Est @ 104.72%	50.91
2022	94.76	Est @ 73.8%	82.63
2023	144.19	Est @ 52.16%	117.4
2024	197.55	Est @ 37.01%	150.21
2025	249.71	Est @ 26.41%	177.3
2026	297.11	Est @ 18.98%	196.99
2027	338.07	Est @ 13.79%	209.3
2028	372.38	Est @ 10.15%	215.28
2029	400.68	Est @ 7.6%	216.31
2030	424	Est @ 5.82%	213.74
Present value of next 10 years cash flows			CA$1,630

 

TSX:AHC DCF 2nd Stage: Terminal Value

	Calculation	Result
Terminal Value	FCF2030 × (1 + g) ÷ (Discount Rate – g) = CA$424.001 x (1 + 1.66%) ÷ (7.09% - 1.66% )	CA$7,938.66
Present Value of Terminal Value	= Terminal Value ÷ (1 + r)10 CA$7,939 ÷ (1 + 7.09%)10	CA$4,001.97

 

TSX:AHC Total Equity Value

	Calculation	Result
Total Equity Value	= Present value of next 10 years cash flows + Terminal Value = CA$1,630 + CA$4,002	CA$5,631.97
Equity Value per Share (CAD)	= Total value / Shares Outstanding = CA$5,632 / 74	CA$76.29

TSX:AHC Discount to Share Price

	Calculation	Result
Value per share (CAD)	From above.	CA$76.29
Current discount	Discount to share price of CA$3.49 = (CA$76.29 - CA$3.49) / CA$76.29	95.4%

Learn more about our DCF calculations in Simply Wall St’s analysis model.

 

[Birdwatch]

https://simplywall.st/stocks/ca/household/tsx-ahc/apollo-healthcare-shares?blueprint=1384833&utm_medium=finance_user&utm_campaign=cta&utm_source=yahoo

[Happy007]

Wow if this gets to 25% of the evaluation from Simply Wall street I will become a Millionaire

[Ventoux]

All of us who are long, wish you nothing but the best. You sound like you believe you are onto a good thing. Time to push the bet?

[Birdwatch]

I strongly believe that all we need is some exposure and this is going to fly!!!!!!!!!!!!!!!!!!

[Birdwatch]

See this

[Ventoux]

"We use analyst's estimates of cash flows going forward 10 years for the 1st stage" Which analysts have provided cash flow estimates? This feels similar to when someone posted the intrinsic value of the warrants based on canadianwarrants.com valuation after the last earnings release. Hmm. I wonder who posted that?

[Birdwatch]

Here take a look here. Shows you fair value. I just never seen a stock with such value in simply wall street before so I share my findings https://simplywall.st/stocks/ca/household/tsx-ahc/apollo-healthcare-shares?blueprint=1323078&utm_medium=finance_user&utm_campaign=integrated-pitch&utm_source=yahoo#valuation

[felix10]

The Fair value estimate is based on earnings projections going out for more than a decade. Maybe they should have taken into consideration that this company is making big money now because of the pandemic. Are people going to keep buying lots of hand sanitizer 5 or 10 years from now when there's a vaccine and COVID is ancient history? This has been a great play this year, but I wouldn't